Managing the impact of Regulatory

Change on bank processes and

technology

Joe Dunphy
VP Product Management - Fenergo

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement
© Fenergo
© 2016 2016,
Fenergo All rights reserved.
Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.
 About Fenergo

Fenergo Overview

Client Lifecycle Technology company focused on legal entity data management, regulation
and client & account related workflows for Investment, capital market and private banks.

Enabling financial institutions to ensure global compliance with regulations such as KYC,
AML, Tax (FATCA & CRS), Derivative Reform (Dodd-Frank, EMIR, Canadian & APAC deriv. rules),
through a community based approach to solving regulation.

32 FIs live on our software, with 18 current active FI implementations. We have 1 agenda: To serve
the Client Lifecycle Mgmt. space and become “The Standard”.
The Fenergo business has grown on avg. 100% yearly for the past four years, culminating in Insight
Ventures and Aquiline Partners investing €75m to fund growth in the summer of 2015.

Headquartered in Dublin, with offices in the New York, Boston, London, Singapore, Abu

Dhabi Sydney and Wroclaw. Fenergo are a specialist team of 300 Entity Data, KYC, Tax,
Derivative and COB technology specialists.

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.
 Regulatory Storm

Volume of New Requirements

OTC Derivatives, BCBS, EMIR, FATCA, CRS, 4th EU
AMLD, Patriot Act, Margin, MiFID II, GDPR ......

Managing Regional Variations

Scope Overlap: e.g. Dodd-Frank, Canadian
Derivatives, EMIR, OTC Asia Pac

Implementation Timeframes
Tight timeframes, changing scope, large areas of
business impact

Cost and Service Impacts

Increased customer requirements, longer onboarding
timeframes, inefficient legacy processes

 FATCA Global Tax; 3rd AMLD 4th AMLD; MIFID MiFID II

 Competing Challenge: COO, Head of Compliance, CEO, Front Office

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 3
 Ongoing Regulatory Change

Ever growing regulatory environment

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 4
 How are banks addressing the challenge?

Consolidated Integrated Rules-based Centralisation Community

delta-based Lifecycle Model configuration of Functions approach
solutions

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 5
 Re-use: Manage the Delta

AML / Dodd Frank FATCA CRS EMIR….

KYC

Legal Entity Name,

Legal Address,
Entity Name, Entity Type,
Address, Entity
Entity Role
Type, & LEIRole & LEI
Entity

Entity Associations & Party Relationships

Traded Products, Accounts & Booking Entities

Documents: Cert of Incorporation, Beneficial Ownership, Trading Agreements

PEP Data EBC Protocol Tax EMIR

1.0 GIIN Residency Classification

Sanctions Swap Docs FATCA Self Clearing

Screening 2.0 Classification Certification Exemption

Risk Scoring DF Protocol& FATCA Docs Reportable EMIR

Compliance W8\W9 Jurisdictions Reporting Req

Single & Consolidated

Party Data Regulatory Store
© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 6
 Integrated Client Lifecycle Management

Bank trading
Entity Data CRM
platforms

Client Lifecycle Events

New Product Existing Client Client

KYC Utilities New client Account Client Maintenance Offboarding
Fund Reviews

Regulatory rules and

Consume classification framework
Bank’s Dodd Frank FATCA AML

AML Data Firewall Understand EMIR CRS

Risk
HKMA assessment
Route KYC
MAS
Market
ASIC PEP / Sanctions
access KYC

Entity Data Management

Industry Data
Client
KYC / AML Classification
Data / SCD Hierarchies Account Setup
ISDA AMEND Data Data

Reporting
SSI’s Operational Data Management Platform

Authorised Contract Managed Trading

Accounts 8
SSIs
Actions Management Agreements

7
© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 7
 Rules Engine Execution

Client Lifecycle  Driven by Bank App UI or Fenergo UI

Request
Request OB and
Credit Ops Legal
Initiation
Initiation KYC

Workflow & Rules Engine (Tightly Coupled)

Decision Criteria KYC Credit Operations Legal

• LE Type
• LE Role
• Traded Product
• Booking Point
• Jurisdiction
• Risk Rating Factors • Credit Required: Y\N • Checklists • ISDA Required
• SDD Vs EDD • Routing rules\limits • Documents • Compliance checks
• KYC question set • Approvals
• Classification
• MLRO

Business Rules Engine

Decision Table

Workflow Documents Classification Classification

Table Types Details

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 8
 Centralisation

The Big Picture Challenges Technology Toolset

Centralisation
Data Residency
 Shared/managed service approach Requirements Confidentiality
 KYC and AML directives
 Reporting obligations – CRS / OTC Countries Offering a
Comparable Level of
Data Masking
 BCBS 239
Protection

Data Access Restrictions

Protection of Associated
Entities

Jurisdictional rules
Personally Identifiable
Localisation Information
Splashscreen validation
 Local data protection and privacy laws
 Lack of uniformity Confidential Clients /
 Non-contracted 3rd parties Confidential Deals Inheritance

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 9
 Community Approach

Regulatory Lifecycle – a community approach

Monitor Initial Proposal Detailed Design Product Delivery Implementation

Monitor upcoming Regulatory analysis Regulatory team Deliver the new The new functionality
regulatory change team create initial work with analysts functionality as an is rolled out for
and tracks via the proposal for review and nominated Bank update to the product implementation to
regulatory roadmap. and debate at SMEs to produce / systems in advance allow adherence to
Forum. detailed product of the regulatory the new regulatory
The roadmap is design specifications. deadlines. requirements.
shared with the The proposal is
Forum and timelines, refined in line with This design is (Bank SMEs remain
approach and the Forum direction reviewed and involved for review
content is debated approved at the and direction
and validated Forum throughout the
delivery process)

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 10
 Final Thoughts

There is no neutral option – every decision makes it better or worse

Look beyond the immediate

tactical requirements of each OTC Patriot Act / 4th
regulation to create an AMLD
extendable strategic
approach
KYC AML
FINRA BCBS
239

Regulatory
Framework Risk
TAX Ass.
FATCA EEx MiFID
xtte
Client enn
dd
Classifications aabbl
lee
FFr Flexible regulatory
raam
CRS / CDOT APAC OTC me Framework supporting
eww
Deriv. Reform oor all regulatory rules &
rkk
classifications

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 11
 Thank You
Visit Us on
e: info@fenergo.com
w: www.fenergo.com
Stand #12
or follow us on:

Global Headquarters: United Kingdom: North America: North America: APAC:

Ormond House, 200 Aldersgate, 5th Floor, 1177 Avenue 470 Atlantic Avenue, Level 57, MCL Centre,
Ormond Quay, London, of the Americas Suite 4051 19-29 Martin Place,
Dublin 7, Ireland EC1A 4HD New York, NY 10036 Boston, MA 02210 Sydney, Australia, NSW 2000

Thank You

© 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement
© Fenergo
© 2016 2016,
Fenergo All rights reserved.
Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.